This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 3 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The decisions relating to the use of profits or income of an entity or organization are known A) Finance decisions. B) Investment Decision. C) Dividend decisions. D) Any of these. Show Answer Correct Answer: C) Dividend decisions. 2. Dividend can be distributed in which all forms A) Cash dividend. B) Stock dividend (Bonus shares). C) Both (a) and (b). D) None of these. Show Answer Correct Answer: C) Both (a) and (b). 3. The inability of a business to meet its fixed financial obligations, like payment of interest, is known as A) Business risk. B) Long-term risk. C) Market risk. D) Financial risk. Show Answer Correct Answer: D) Financial risk. 4. What do you need to do within the process of evaluating financial statues? A) Evaluate assets owned. B) Evaluate assets owned and liabilities borne. C) Check savings and investments owned. D) Check credit cards debts. Show Answer Correct Answer: B) Evaluate assets owned and liabilities borne. 5. Which of the following is an example of a financing decision? A) Purchasing machinery. B) Issuing new shares. C) Declaring dividends. D) Preparing payroll. Show Answer Correct Answer: B) Issuing new shares. 6. Berikut ini adalah beberapa Alur dari Transaksi Bisnis, KECUALI: A) Terjadinya Transaksi. B) Posting di Buku Besar. C) Dokumen Disiapkan. D) Menyusun Anggaran. Show Answer Correct Answer: D) Menyusun Anggaran. 7. Break-even point is that level of sales revenue at which there is ..... A) Profit. B) Loss. C) No profit no loss. D) None of the above. Show Answer Correct Answer: C) No profit no loss. 8. What are the components of capital structure A) Debts and equity. B) Debts, preference shares and equity. C) Debts, revenue and equity. D) None of the above. Show Answer Correct Answer: B) Debts, preference shares and equity. 9. Notes and accounts receivable that result from sales transactions are often called trade receivables. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 10. A personal check certified by the bank as to the availability of funds in the account of the person issuing the check A) Personal Check. B) Certified Check. C) Traveler's Check. D) Business Check. Show Answer Correct Answer: B) Certified Check. 11. Under ..... type of factoring the factor assumes the risk of Bad debts. A) Non-recourse factoring. B) Maturity factoring. C) Advance factoring. D) Recourse factoring. Show Answer Correct Answer: A) Non-recourse factoring. 12. Accounts receivable management based on the principle, as liquidity increases the return decreases? A) A. True. B) B. False. C) C. All of them. D) None of the above. Show Answer Correct Answer: A) A. True. 13. Tom works a 35 hour work week and makes $ 13.50 per hour, what is his gross pay? A) $ 474.50. B) $ 472.50. C) $ 470.00. D) $ 400.00. Show Answer Correct Answer: B) $ 472.50. 14. At its most basic level, the function of financial intermediaries is to ..... A) Track and report interest rates. B) Move money from lenders to borrowers and back again. C) Report all financial transactions to the federal government. D) Effect a transfer of wealth in society. Show Answer Correct Answer: B) Move money from lenders to borrowers and back again. 15. Salaries Expense A) Debit. B) Credit. C) All the above. D) None of the above. Show Answer Correct Answer: A) Debit. 16. What is the EAR if the APR is 10.52% and compounding is daily? A) Slightly above 10.09%. B) Slightly below 11.09%. C) Slightly above 11.09%. D) Over 11.25%. Show Answer Correct Answer: C) Slightly above 11.09%. 17. When a company decides to invest in a new project, which financial decision type is primarily involved? A) Financing decision. B) Investment decision. C) Working capital decision. D) Dividend decision. Show Answer Correct Answer: B) Investment decision. 18. Types of expenditure in terms of funding source divided in ..... A) External financing and Internal financing. B) Own capital expenditure and foreign spending. C) Internal expenditure and intensive spending. D) Expenditure and Foreign spending. Show Answer Correct Answer: A) External financing and Internal financing. 19. Operating leverage measures ..... A) Market Risk. B) Production Risk. C) Business Risk. D) Financial Risk. Show Answer Correct Answer: C) Business Risk. 20. Retained earnings items can be seen in what components of financial management. Choose the letter below. A) A. Balance Sheet Statement. B) B. Income Statement. C) All the above. D) None of the above. Show Answer Correct Answer: A) A. Balance Sheet Statement. 21. Why are Capital Budgeting Decisions critical? A) Risk involved. B) Decisions are irreversible. C) Large Amounts of funds involved. D) All of the above. Show Answer Correct Answer: D) All of the above. 22. Investment can be defined. A) Person's dedication to purchasing a house or flat. B) Use of capital on assets to receive returns. C) Usage of money on a production process of products and services. D) Net additions made to the nation's capital stocks. Show Answer Correct Answer: B) Use of capital on assets to receive returns. 23. AM Co will receive a perpetuity starting in 2 years' time of $ 10, 000 per annum, increasing by the rate of inflation (which is 2%).What is the present value of this perpetuity assuming a money cost of capital of 10.2%? A) $ 90, 910. B) $ 74, 403. C) $ 125, 000. D) $ 115, 740. Show Answer Correct Answer: D) $ 115, 740. 24. Explain the concept of working capital management in a real-world scenario. A) Working capital management involves only managing long-term assets. B) Working capital management focuses solely on minimizing liabilities. C) Working capital management is not important for a company's financial health. D) Working capital management is the process of managing a company's current assets and liabilities to ensure efficient operation and financial health. Show Answer Correct Answer: D) Working capital management is the process of managing a company's current assets and liabilities to ensure efficient operation and financial health. 25. Internal Rate of Return (IRR) to all capital providers is equal: A) The hurdle rate of return to all capital providers. B) The actual return on total capital. C) The cost of capital. D) The total discounted free cash flows to all capital providers. Show Answer Correct Answer: B) The actual return on total capital. 26. Are the following statements true or false? True False 1. Accounting profit is not the same as economic profit. 2. Profit takes account of risk. 3. Accounting profit can be manipulated by managers. A) False, False, True. B) True, False, True. C) True, True, False. D) True, False, False. Show Answer Correct Answer: B) True, False, True. 27. What does the term "ROI" stand for in finance? A) Rate of Interest. B) Return on Investment. C) Revenue on Investment. D) Risk of Inflation. Show Answer Correct Answer: B) Return on Investment. 28. Which item listed below is not funded by taxes in your community? A) Public library. B) Community center. C) Fast food restaurant. D) None of the above. Show Answer Correct Answer: C) Fast food restaurant. 29. Which of the following is NOT an example of an equity market transaction? A) Mary sells her shares of Apple stock. B) Mark contacts his broker and requests a purchase of IBM bonds. C) Sahid buys shares of a small company stock traded on the NASDAQ. D) All of the above are equity market transactions. Show Answer Correct Answer: B) Mark contacts his broker and requests a purchase of IBM bonds. 30. Growth in a business can be generated by: A) An increase of competitors in the market. B) Advances in technology and access to resources. C) An increase in size and value of a business. D) Opportunities to expand globally. Show Answer Correct Answer: C) An increase in size and value of a business. 31. A realistic and measurable way to reach goals for which you must plan and set aside resources A) Objective. B) Value. C) Goal. D) Need. Show Answer Correct Answer: A) Objective. 32. Present value interest factor (PVIF) are usually less than 1.0 A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 33. What is a potential risk of financial decisions? A) They have no long-term effects. B) They only affect one department. C) They can impact all business operations. D) They can be easily reversed. Show Answer Correct Answer: C) They can impact all business operations. 34. The capital budgeting decision model that utilizes all the discounted cash flow of a project is the ..... model, which is one of the single most important models in finance. A) Discounted payback period. B) Profitability index (PI). C) Net present value (NPV). D) Internal rate of return (IRR). Show Answer Correct Answer: C) Net present value (NPV). 35. Decision relating to quantum of funds to be raised from varions long term A) Dividend decision. B) Financing decision. C) All the above. D) None of the above. Show Answer Correct Answer: B) Financing decision. 36. A way to analyze whether debt or lease financing would be preferable is to: A) Compare the payback periods for each alternative. B) Compare the net present values under each alternative, using the cost of capital as the discount rate. C) Compare the net present values under each alternative, using the after-tax cost of borrowing as thediscount rate. D) Compare the effective interest costs involved for each alternative. Show Answer Correct Answer: C) Compare the net present values under each alternative, using the after-tax cost of borrowing as thediscount rate. 37. Inventories can be classified into A) Product, material, item. B) Raw material, work in progress, and finished good. C) Stationaries, and other goods. D) None. Show Answer Correct Answer: B) Raw material, work in progress, and finished good. 38. Mixture of different investment is called A) Capital structure. B) Financial system. C) Mixture of Investment. D) None of these. Show Answer Correct Answer: C) Mixture of Investment. 39. Financial blueprints are determined by A) Financial Decision. B) Capital Structure. C) Financial Leverage. D) Financial Planning. Show Answer Correct Answer: D) Financial Planning. 40. What type of loan requires both principal and interest payments as you go by making equal payments each period? A) Amortized loan. B) Discount loan. C) Compound loan. D) Interest-only loan. Show Answer Correct Answer: A) Amortized loan. 41. What topics are typically covered in financial management training? A) Strategic management methods. B) Personal financial planning. C) Data mining techniques. D) Market analysis and forecasting. Show Answer Correct Answer: B) Personal financial planning. 42. The major securities traded in the capital markets are ..... A) Stocks and bonds. B) Bonds and commercial paper. C) Commercial paper and Treasury bills. D) Treasury bills and certificates of deposit. Show Answer Correct Answer: A) Stocks and bonds. 43. What does the principle of diversification in financial management primarily aim to achieve? A) Concentrate all investments in a single high-growth asset. B) Maximize short-term profits regardless of risk. C) Spread financial risk across various sources. D) Ensure immediate liquidity for all assets. Show Answer Correct Answer: C) Spread financial risk across various sources. 44. The "time value of money" means that A) Money paid out today less value than if the money is paid out in the future. B) The more time a person has to save, the lower the return on the money. C) Money received today is worth more than the same amount of money received in the future. D) The longer money is held, the less likely it will be spent. Show Answer Correct Answer: C) Money received today is worth more than the same amount of money received in the future. 45. Higher Operating Leverage is related to the use of higher ..... A) Fixed Cost. B) Variable Cost. C) Debt. D) Equity. Show Answer Correct Answer: A) Fixed Cost. 46. Comparing alternatives against criteria is an accurate way of A) Setting a Goal. B) Decision making. C) Making a Value. D) Financial Planning. Show Answer Correct Answer: B) Decision making. 47. Which of the following would be considered an advantage of the SOLE PROPRIETORSHIP form of business organization? A) Unlimited life. B) Income taxed at only one level. C) Wide access to capital. D) Pooled expertise. Show Answer Correct Answer: B) Income taxed at only one level. 48. Optimum capital structure is at which ..... is minimum and value of firm is maximum? A) A. EBIT. B) B. Weighted average cost of capital. C) Tax rate. D) None of these. Show Answer Correct Answer: B) B. Weighted average cost of capital. 49. In Malaysia, the only financial institution that specializes in long-term money market operations is the discount house. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 50. The process of calculating present value of future cash flows A) Compounding. B) Discounting. C) Both compounding and discounting. D) None of the above. Show Answer Correct Answer: B) Discounting. 51. It means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. A) Financial Markets. B) Financial Statement. C) Financial Institutions. D) Financial Management. Show Answer Correct Answer: D) Financial Management. 52. Which of the following statements describes the main objective of financial management? A) Efficient acquisition and deployment of financial resources to ensure achievement of objectives. B) Providing information to management for day to day functions of control anddecision making. C) Providing information to external users about the historical results of the organisation. D) Maximisation of shareholder wealth. Show Answer Correct Answer: A) Efficient acquisition and deployment of financial resources to ensure achievement of objectives. 53. A ratio that measures the ability of the company to meet financial obligations as they come due, without disrupting the normal ongoing operations. A) Liquidity Ratio. B) Leverage Ratio. C) Asset Utilization Ratio. D) Profitability Ratio. Show Answer Correct Answer: A) Liquidity Ratio. 54. Which of the following is NOT a financial activity? A) Paying school fees. B) Depositing in bank. C) Watching reels. D) Saving money. Show Answer Correct Answer: C) Watching reels. 55. It is a kind of bank which provides facilities of more than one type of banking. A) Rural Bank. B) Commercial Bank. C) Universal Bank. D) Thrift Bank. Show Answer Correct Answer: C) Universal Bank. 56. Cash turnover is an average time required to acquire inventory, sell it and collect money from it. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 57. Which of the following is not a key component in the SMART concept for goal setting? A) Measurable. B) Specific. C) Aim. D) Time-bound. Show Answer Correct Answer: C) Aim. 58. An airline issuing Commercial Paper to fund its short-term operational expenses is utilizing which type of financing? A) Capital Leasing. B) Equity Financing. C) Debt Financing. D) Retained Earnings. Show Answer Correct Answer: C) Debt Financing. 59. What are the key elements of an income statement? A) Assets, liabilities, equity. B) Cash flow, balance sheet, statement of cash flows. C) Revenue, expenses, gains, and losses. D) Interest, dividends, taxes. Show Answer Correct Answer: C) Revenue, expenses, gains, and losses. 60. What is a key benefit of using hybrid securities? A) No risk involved. B) Flexibility in financing. C) Guaranteed returns. D) High liquidity. Show Answer Correct Answer: B) Flexibility in financing. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Business Studies Chapter 9 Financial Management Quiz 1Class 12 Business Studies Chapter 9 Financial Management Quiz 2Class 12 Business Studies Chapter 9 Financial Management Quiz 4Class 12 Business Studies Chapter 9 Financial Management Quiz 5Class 12 Business Studies Chapter 9 Financial Management Quiz 6Class 12 Business Studies Chapter 9 Financial Management Quiz 7Class 12 Business Studies Chapter 9 Financial Management Quiz 8Class 12 Business Studies Chapter 9 Financial Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books